No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events

Jiao  Luo; Stephan  Meier; Felix  Oberholzer-Gee

Working Paper | HBS Working Paper Series | 2012

No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events

by Jiao Luo, Stephan Meier and Felix Oberholzer-Gee

Abstract

One of the benefits of Corporate Social Responsibility (CSR) programs, it has been argued, is that they build up a reservoir of public good will, shielding companies in times of trouble. In this paper, we test the view that CSR provides protection from public ire by analyzing the media's response to corporate crises. Our application is spills in the oil industry. We find the media far more likely to report accidents if they occur at a company with a superior CSR record. Rather than acting as an effective form of insurance, our results suggest that a strong CSR record can be a liability. Moreover, the tone of coverage is no less critical for organizations with a greener reputation. At the same time, firms with substantial past environmental problems are also more likely to find their corporate failings broadcast in the news. Companies hoping to minimize the risk of media attention to accidents need to be careful not to place their organizations at the very top or the very bottom of CSR rankings. This result has important implications for thinking about CSR and the privately optimal level of such activities.

Keywords: Corporate Social Responsibility and Impact; Crisis Management; Media; Newspapers; Business and Community Relations; Corporate Strategy;

Language: English

Format: Print

28 pages

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Citation:

Luo, Jiao, Stephan Meier, and Felix Oberholzer-Gee. "No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events." Harvard Business School Working Paper, No. 12-091, April 2012.

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No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events

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